DPatel304 wrote:Ah, that's good to know. That is definitely interesting, but I'm not so sure it represents a 'shift', just yet. I think there is demand for both suburb living and city living, but, the thing is, DFW suburbs are HIGHLY desirable, so it's no surprise they are still going strong. Dallas isn't that desirable, especially when you talk about city living.

Also, I'm curious to know if the suburbs were late to the party when it comes to multi-family construction. Is it possible that Dallas had a strong start with multi-family construction, while the suburbs were still building single-family homes, and now things are generally balancing out?

Tnexster wrote:That is quite a drop for Houston, I wonder how the floods will impact them? Lots of economic activity in rebuilding but not sure about the longer term prospects.

It's actually far worse than anyone realizes. Houston/The Woodlands has had negative GDP for three straight years ... with their latest GDP they are lower than they were in 2013.

You have to go back to 2012 as a comparison in order for their current GDP reading to be considered positive growth.

Houston/The Woodlands has at best been treading water this year and Harvey's effects will probably cause a contraction in GDP for them again when this year's numbers are released a year from now.

Unless oil soars to the $100 range again it is going to be a long, hard slug for them to pull out of the hole they've fallen into, if ever. A return to $100 oil is not being predicted by any analysts and really just doesn't appear to be in the cards ever again.

It is now appearing that 2016 is going to be viewed as the watershed year in which DFW pulled ahead of Houston/The Woodlands in a manner so definitive on several key indices and levels ... that we will not look back for a very, very long time ... if ever.

DFW is now the economic king and powerhouse in Texas ... and the rock solid # 4 in the nation ... and we should retain those positions indefinitely into the future (barring some extraordinary geopolitical rupture).

* DFW set a new all-time construction volume record at $22.2 billion in 2017* DFW ranked as number 2 in the nation in 2017 after NYC's $41.1 billion* DFW 2017 dollar volume is 6% more than 2016, which itself had been the previous record* DFW commercial building activity totaled $9.6 billion, a 10 percent gain from 2016* DFW residential building construction hit $12.6 billion, a 2 percent rise from 2016

This relocation by CBRE Hotels from Houston to Dallas is a prime example of what is occurring on a much broader and larger context. The age old "struggle", if you will, between Houston and Dallas for supremacy has been decided ... Dallas already has and is pulling away from Houston in ever greater ways with each passing day.

The Dallas region is now 4th largest GDP in the nation (Houston falls from 4th to 6th), Dallas region has 22 Fortune 500's (Houston falls from 26 to 20), Dallas is literally number one in the nation in just about every major financial and economic metric (with Houston in many instances literally falling off the map).

Houston's role is number two in Texas and consequently the entire South, still quite important of course, but now must accept it has an ever more apparent supporting role to Dallas as the number one throughout the South and number 4 nationally.

The positions and roles of the two respective cities and regions have flipped. About the only major category that Houston now tops Dallas on is in its greater city population ...

CBRE is moving its hospitality consulting and advisory services for the South-Central U.S. region from Houston to Dallas.

“Dallas is the quintessential location for focusing our services throughout the South-Central U.S. In addition to DFW’s centralized location, transportation hub and growing tourism, Dallas is home to many hotel franchises, representatives, management companies, developers and investors, as well as an essential financial market for our industry. This restructuring will enable us to expand our advisory services to ultimately better serve a broader range of our hotel clients,” CBRE Hotels Director, Consulting, Jeff Binford said in a statement.

The reason Dallas is the quintessential location is simple. Dallas is the busiest, biggest hotel market in Texas.

According to Marcus & Millichap research, Texas has the largest construction pipeline in the nation and out of all the Texas markets, Dallas has the largest pipeline of hotel rooms by far.

The data from the second half of 2017 puts Dallas at roughly 8,000 rooms in the pipeline and second place Houston has about 6,000 rooms in its pipeline. The report indicates this may hurt occupancy for a while, but it also says demand remains strong as occupancy in Texas trends in the mid 70% range, well above the national average of around 65%.

CBRE Hotels will work out of 2100 McKinney Ave., a 352K SF, Class-A property in Uptown.

Glad to see references to the economic reach of Dallas expanded to South Central rather than Southwest. The reference may seem like a subtle change, but the reality is huge -- it's not just Texas, Oklahoma, New Mexico and part of Lousiana... it's Texas, Oklahoma, New Mexico, Lousiana, Arkansas, Kansas parts of Mississippi, Colorado.... growing!

Houston has lived through swings like this for decades. Exxon has been reported to expect tripled Permian Basin oil/gas production over the next five years, and Mexico is primed to finally turn back into a major oil/gas producing country -- both of these growth markets will be channeled through Houston.

I really want the renewable energy companies to move HQs to North Texas, Fort Worth being the ideal downtown setting for them.

I receive a weekly newsletter from Allie Beth Allman Real Estate that nearly always has very interesting and topical statistics for the area. The following three are from last weeks March 9th newsletter:

DFW: DFW is the state’s biggest hotel market, reports Source Strategies, raking in slightly over $3 billion in revenue in 2017. Austin posted the highest overall occupancy rate of 75% (DFW 70%). The hotel with the most revenue per-available-room per-night was Dallas’ Ritz-Carlton. The 1,511-room Gaylord Texan Resort and Convention Center took in the most overall revenue of nearly $89.1 million. Other Dallas hotels in the top five were the Hilton Anatole and the Omni Dallas.

DFW: Despite increasing mortgage rates and home prices, North Texas home sales rose 10% in February over last year, reports the Dallas Morning News. Real estate agents sold 7,188 preowned single-family homes last month, the highest February sales total ever for the area, according to NTREIS data. For the first two months of 2018, agents sold 7% more homes than the same period in 2017. The biggest increase so far is for homes priced from $200,000-$250,000. More than 17,500 homes were listed for sale entering March, up 6% from last year, but still woefully low.

DFW: DFW had more home sales in 2017 than any Texas metro area, according to a new TAR report, accounting for about a third of all home sales in the state. More than 102,000 preowned single-family homes were sold in the DFW area, up 3% from 2016. Builders sold around 32,000 new homes. Statewide, 336,502 homes were sold, up 4% for the year. The report noted that almost a third of homes sold were between $200,000-$300,000. Almost a quarter of buyers were between 45-54 years of age. Economists say the housing recovery that started in North Texas almost eight years ago still has momentum.

More Hyperscale Demand On The Way For Dallas Data Center MarketMarch 22, 2018, by Jeremiah Jensen, Bisnow Dallas

More hyperscale users are on their way to the Dallas-Fort Worth data center market in 2018 and 2019 (10 MW to 30 MW of extra demand estimated), according to CBRE's Data Center Solutions team. Excellent fundamentals, room to build, prime geography and low costs of electricity/development put DFW on shortlists for developers and investors everywhere.

“We hear about this all the time, [when] a client is on a search for data center space, and they don’t know exactly where they want to be, they don’t have to be in Northern Virginia for instance, Dallas is 95% of the time on that list,” CBRE Senior Vice President of Data Center Solutions Brant Bernet said.

Historically, DFW has been primarily an enterprise market (80% enterprise and 20% cloud as a colocation market), and the lion’s share of DFW’s excellent absorption numbers comes from enterprise users, which typically are smaller than hyperscale players. That makes its placement among the nation's data center markets an impressive feat — DFW has the third most absorption in the nation behind Northern Virginia and Silicon Valley whose absorption numbers get boosts from hyperscale users, according to CBRE’s data center team.

DFW is getting its own significant hyperscale players in the market, such as Facebook, that do not register in the data because they are privately held. Facebook’s Fort Worth data center has almost 100 megawatt of load in play already and is supposed to double. DFW’s total inventory, not including users like Facebook that own their space, is 252 MW, the second-largest in the nation, and 40 MW was in the pipeline at the end of 2017[/b], according to CBRE research.

“I think the same fundamentals that brought Facebook here will attract companies like AWS and Microsoft (aka hyperscale users) when the timing is right,” CBRE Associate, Data Center Solutions, Haynes Strader said. “Every co-location provider is positioning themselves to be able to accommodate a large cloud provider when the time is right.”

DFW: With major corporate relocation in northern suburbs, support companies are settling in the urban core, especially the large millennial workforces. Uptown and Downtown are leasing both office and living space at a record pace. Deep Ellum and Farmers Market are popular residential areas, as are East Dallas and Knox Henderson. Apartment prices went up about 7% last year, responding to demand for amenities.

Any worries or concerns about a pull back or slowdown are completely unfounded as the data for the first two months of 2018 indicate yet another record year of construction volume in both the commercial and residential sectors is unfolding before our eyes ... this on top of already two record years in a row (2016 & 2017)!!!

Not sure where to put this, but this dumb listicle gives way too much credit to individual projects like the Farmers Market and the Joule (we're a global city because of them, really?) and completely ignores things like lifting the Wright Amendment and DART service to DFW.

In high demand: D-FW among busiest U.S. areas when it comes to office leasing & constructionSteve Brown, Dallas Morning News, 04-24-18

North Texas was one of the top office leasing markets in the country in the first quarter and remains one of the busiest office building markets.

Only New York City had more net office leasing in the first three months of 2018, according to a new report by commercial property firm JLL.

More than 1.3 million square feet of D-FW net leasing was reported in the nationwide JLL office survey. New York was first with 1.6 million square feet of absorption and Washington, D.C. was ranked third with about 965,000 square feet of net leasing.

"As we enter the eighth year of this real estate cycle, Dallas-Fort Worth has shot to the top of the most in-demand office markets in the country," JLL analysts said.

North Texas ranked fourth for office construction in the first quarter, with about 7.5 million square feet of building space. That compares with more than 15 million square feet of construction in New York, the top office building market according to JLL....

Definitely a shame to see Houston going through such a slump. I have no doubt they will eventually bounce back, but, for now, it seems like it's full speed ahead for DFW.

I'd say the past decade, DFW shared the spotlight with Houston and Austin when it came to record growth. I feel like this next decade, DFW will really break out and outshine the rest of Texas and take the spotlight for itself. The numbers are already there, but, it will probably be a few years before the effects are actually felt/seen.

We've already seen the numbers have been slumping for Houston for a while, and now Austin seems to be reaching the stage where they going through some major growing pains. I don't really have any numbers to back this up, but, having lived there for a little over a year, I've seen a few major issues that, I think, will have a negative effect on growth (traffic/congestion, rising property values, lack of good public transportation). I realize that DFW also has all of these problems, but they aren't quite as bad as Austin's yet, and, more importantly, I believe we are better equipped to deal with each and every one of them.

The only thing that, I think, could stop DFW from seeing some insane growth this next decade is some sort of nation-wide recession or something equally catastrophic.

It's crazy how so many midrise and highrise condo and office projects are getting approved and started in Houston despite the weakening economics of the area and low absorption rates. Whereas in the arguably strongest multifamily and office market (DFW), basically no decent highrise condo projects to speak of and office buildings can't be built without heavy pre-leasing. Nothing on spec.

Matt777 wrote:It's crazy how so many midrise and highrise condo and office projects are getting approved and started in Houston despite the weakening economics of the area and low absorption rates. Whereas in the arguably strongest multifamily and office market (DFW), basically no decent highrise condo projects to speak of and office buildings can't be built without heavy pre-leasing. Nothing on spec.

Houston's always going to have more projects within their city limits. They have 600+ sq. Miles worth of projects that they account for.

That's why you gotta look at the metro numbers. That tells the real story.

Relatively, Corpus is the one that's likely to go all crazy with the liquefied natural gas exports, though Houston, Beaumont, Lake Charles area will each embark higher volume, it's just 'new' to Corpus. I don't like that fossil fuel still generate too much pollution, but it's just so potent. Hopefully petro-exports will elevate the Port of Corpus to the next level; the state could use another massive point of entry, South Texas certainly needs some moxy.... and the only nice beaches in the state roll south of Corpus. The Laredo-San Antonio-Corpus Christi trade triangle could challenge and eventually rival volumes out of Houston.

The Port of Houston is booming, and it is benefiting Texas at large (especially the Dallas region!)by Catie Dixon, Managing Editor, Houston BisNow.com, May 03, 2018

The port increased inbound containers by 21.6% last year, the largest leap in the country, Colliers reports in its 2018 Industrial Seaport Outlook. Houston has been an export powerhouse, and 2017 was the first time in more than a decade that imports exceeded exports.

The shift is coming at a good time — Colliers principal Gary Mabray said potential tariffs on outbound petrochemical products could cause billions of dollars of [negative] impact, whereas tariffs on inbound steel products likely will only have a minimal impact on volume.

“Import volumes are growing at the Port of Houston because of the port's excellent logistics capabilities, as well as the need for retailers to keep higher inventories in warehouses to service Texas and the rest of the southern U.S. growing population,” Colliers National Director of Industrial Research James Breeze said.

The Port of Houston’s activity is driving industrial demand in Houston, particularly in the far east submarket, but also in Dallas-Fort Worth, where many of the imports are funneled via truck or rail. (For example, Randalls relocated its distribution footprint from Houston to Dallas.)

Dallas led the U.S. in 2017 for net absorption, with Colliers recording 23.3M SF leased up and 27.6M SF delivered. The Metroplex is on a high of 30 straight quarters of positive net absorption.

The Dallas-Fort Worth office market is seeing sustained, demand-driven growth with net absorption that rivals the top office markets in the country, according to the latest report from Transwestern.

DFW net absorption numbers are behind only San Francisco and Seattle — and ahead of San Jose/Silicon Valley — for Q1. Flip those locations for four-quarter trailing numbers — the Dallas-Fort Worth office market soaked up 5.5M SF of office space in the last 12 months, second only to San Jose-Silicon Valley, which posted just over 7M SF in net office space absorption.

“This June will mark the ninth year of economic recovery since the last recession,” Transwestern Director of Research Ryan Tharp said. “[Dallas] still has about 8.3M SF under construction, and I think that says a lot about how optimistic developers are.”

DFW’s office boom began around six years ago, when office construction began to rise rapidly, especially in the Far North, Uptown and Las Colinas areas.

When the biggest dog of Houston focuses on growing logistics in Dallas you know the logistics momentum here is enormous!

Hines Earmarks $600M For Logistics Real Estate, With DFW Topping The Wish ListMay 08, 2018 Catie Dixon, Dallas BisNow Managing Editor ...Dallas-Fort Worth is one of its top targets — Tamlyn joined Hines last year to oversee the company's expansion into the hot Dallas industrial market. It owns about 2M SF of logistics product in the Metroplex with its acquisition last week of DFW East Logistics Center. The three-building, 260K SF shallow bay industrial park in Irving is 15% leased.

Industrial has been thriving in Dallas. Vacancy dropped to 5.8% in Q1 on the heels of 30 straight quarters of positive net absorption. Logistics is a big force behind leasing, with consumer goods users driving 3.9M SF of absorption in Q1. Development has been active — 19M SF is in the pipeline — but nearly half of it is pre-leased.

clcrash19 wrote:man we are kicking houston's ass right now in economy and growth.. the next five years could only widen the gap between houston metro and dfw.

I wonder how much of that gap will close if oil stays up fairly high? It has been fascinating to watch the two metros growth patterns evolve.

^^^^^^^Even if oil were to go back to the go-go days of $100+ per barrel (which it will not) the bounce back will be much more muted than in years past ... Houston has been whacked hard several times in a row now from oil busts and this time it has changed the mindset ... "less is more" is the new mantra.

The vast majority of the 9.5 million square feet of sublease office space in Houston is from oil companies downsizing. In the aftermath of this Houston office market bloodbath oil companies are reducing their square foot per employee ratio down by an average of 40% ... and in some cases exceeding 40% ... being much more conservative this go around.

Not sure where else to put this so posted it here. Interesting article about the similarities between Dallas and Dubai.

The Beck Group's Uber Skyport Concept: The Hive Courtesy of The Beck Group

The Sister City Qualities Of Dallas And DubaiKimberly Reeves, Bisnow Austin-San Antonio, June 13, 2018

Dallas and Dubai were both picked as initial test sites for Uber's "flying taxi" project — along with Los Angeles. Frequent traveler Grant Pruitt, co-founder of Whitebox Real Estate, wasn't surprised at the choice, as he can list a bunch of similarities between the home of J.R. Ewing and United Arab Emirates' luxury capital....Pruitt said the fact the two cities are so similar is one reason why he wasn't surprised Dubai and Dallas were both on the Uber list. Dallas and Dubai — and even Los Angeles — are the type of cities ready to be first, biggest or best, he said.

All of the important economic data is suggesting instead of a slowdown in the Dallas area economy things are actually picking up ... and strengthening above the already red hot levels we've been seeing:

Dallas-Fort Worth has added about 1.1 million new residents since 2010, about the same number as Houston....The most recent numbers are excellent for Dallas-Fort Worth.

According to the U.S. Census, D-FW added 146,000 new residents in 2017, topping second place Houston by more than 50,000 people.

More importantly, the most recent job numbers were incredible, with nominal job growth of about 125,000 year-over-year, as of March 2018.

This marks an acceleration in job growth compared to previous months. Dallas-Fort Worth was already the strongest job market in the country: now it’s even stronger.

The combination of outstanding population growth, in-migration and job growth creates a virtuous cycle for the metro’s economy, and helps drive demand for commercial real estate. Strong population growth, job growth and in-migration should continue to power the Dallas-Fort Worth commercial real estate industry for years to come.

For every doom and gloom prognostication there are many more that see the glass full and remaining that way into the foreseeable future ... facts are facts and there is always a doom and gloom pessimist at the ready to spew their negativity! Ha ha!

CRE Opinion: The DFW Economy and its DriversWith the fundamentals of all real estate classes performing well in DFW, we are on most investors “buy” list.By Steve Thelen, Published in D Magazine, Commercial Real Estate, June 21, 2018 4:44 PM... Our research shows that, thanks to a number of factors in place, North Texas bucks most of those trends. In fact, our market sees no major signs of slowing down in the immediate future.

Probably the biggest headline, we expect 96,000 new jobs in 2018 with no slowdown in sight. DFW is running at a 2.7 percent annual increase, outpacing New York at 1.4 percent and 1.6 percent for Los Angeles....With the fundamentals of all real estate classes performing well in DFW, we are on most investors “buy” list....And don’t forget about the engines that drive our growth—access to two world-class airports, no state income taxes, central time zone, business friendly climate and overall low cost of living. With these attributes, DFW is historically like a huge vacuum in a down cycle. The region draws companies looking to lower costs and recruit quality workers. This will continue to be a buffer for us against a strong downturn....If we continue our growth path, it will certainly be a long run. But as a friend in oil and gas reminded me, “Most of our industries are a little like being a farmer. Every several years you are going to have a drought—so plan for it!” Some level of drought will certainly hit us but it looks like we have several more years of runway!

The numbers definitely look good for North Texas. From my own personal observations, it seems like the quantity of projects has declined, but, at the same time, quality has really increased.

I guess it's hard to maintain the same level of quantity we had before when we were getting a lot of low-quality mid-rises that looked boring and cheap, so I wouldn't classify less quantity as a 'slowdown' but it seems like we are entering a new phase where each project really has to step up its game to justify the costs.

I will say I don't have any numbers to back up my claims, so I could be wrong about the 'quantity' part, but this just seems to be what I have observed recently.

DPatel304 wrote:The numbers definitely look good for North Texas. From my own personal observations, it seems like the quantity of projects has declined, but, at the same time, quality has really increased.

I guess it's hard to maintain the same level of quantity we had before when we were getting a lot of low-quality mid-rises that looked boring and cheap, so I wouldn't classify less quantity as a 'slowdown' but it seems like we are entering a new phase where each project really has to step up its game to justify the costs.

I will say I don't have any numbers to back up my claims, so I could be wrong about the 'quantity' part, but this just seems to be what I have observed recently.

I agree that the quality of projects has gotten better. I wish Ross Avenue would have better quality than what has gone up. It looks cheap

Definitely agree with you there. I used to envious Ross Ave. as being this grand corridor that would be great for pedestrians/bikers and run from the CBD all the way to Lower Greenville, but, so far, the development facing this street has been extremely poor.

I suppose the street itself could still become bike/pedestrian friendly, but it won't be that interesting of a street to travel down.